New management takes reins at Take-Two

/ Source: The Associated Press

Newly appointed senior executives at Take-Two Interactive Software Inc. broadly outlined a 100-day plan to turn around the beleaguered video game company.

During a conference call with financial analysts Tuesday, executives said the company was still on track to release a sequel to its first-person shooter “Grand Theft Auto,” as well as other titles slated for release this year. The company said it isn’t changing its overall financial guidance for 2007.

Although profits from a new sports division may not meet previous guidance, Take-Two said it still expects 2007 revenue of $1.2 billion to $1.25 billion. Second-quarter revenue is still expected to decrease 25 percent from last year, said Chairman Strauss Zelnick.

Zelnick joined Take-Two less than two weeks ago, after a March 29 shareholder revolt that ousted five directors and the CEO. On Monday, the CFO announced his resignation, and last week the New York-based company disclosed it was under a formal investigation by the Securities and Exchange Commission over stock-options practices.

The new CEO, Ben Feder, said Tuesday that he and other new executives are working closely with regulators. On Tuesday, the company regained compliance with the Nasdaq Stock Market’s listing requirements.

Feder and Zelnick also said they were reviewing the company’s organizational structure and developing plans to purge noncore and underperforming divisions.

Eventually, the new management team may launch an incentive-based compensation structure even for rank-and-file employees, said Zelnick, whose company, New York-based ZelnickMedia Corp., received $750,000 for his taking over the chairmanship.

The company, which Zelnick founded, could receive an additional $750,000 in bonuses if Take-Two hits annual financial targets — and the new management may try to implement a similar, incentive-skewed compensation plan for other employees.

“Things will be very different under our leadership, both in what we plan to do and our timeframe,” Feder said. “The watchword is integrity.”

The emphasis on moral soundness comes after a series of embarrassing ethical lapses and accounting irregularities at Take-Two.

Anti-violence advocates have also hounded the company for the murderous, sexual content of Take-Two’s most popular line of games, “Grand Theft Auto.” One version of the game — one of the most popular titles in the video game industry — included a hidden, lewd scene that sparked a 2005 congressional investigation.

Before the shareholder revolt last month, the former executive team was in talks with several parties to buy Take-Two. Zelnick and Feder said they were still in contact with potential buyers, but they implied that a quick sale was unlikely, and they planned to stay at the helm for some time.

“We feel it incumbent to stabilize the situation before we get a new CEO in here because we don’t want the permanent CEO to have to deal with this,” Feder said.

Take-Two shares closed Tuesday at $20.38, down 38 cents, or 1.8 percent. After the conference call, shares gained 14 cents in extended trading.